Ratan Tata news: How Noel Tata became most powerful person in Tata Group? How are Tata Sons, Tata Group and Tata Trusts different?

Tata Sons, Tata Group, and Tata Trusts overall structure is complex to understand, will Noel Tata have full control over the whole group now?

After the passing of Ratan Tata, Noel Tata, his half-brother, has been appointed the new chairman of Tata Trusts. This decision was made following the death of Ratan Tata at the age of 86 on October 9. Ratan Tata, who held the honorary position of Chairman Emeritus of the Tata Group, has now been succeeded by 67-year-old Noel Tata to lead Tata Trusts. Tata Trusts holds a controlling 66% stake in Tata Sons, the holding company of the Tata Group.

Noel Tata’s Appointment & His Power

Following Ratan Tata’s demise, Noel Tata has been selected as the new chairman of Tata Trusts. Since Tata Trusts controls Tata Sons with a 66% stake, this effectively makes Noel Tata the most powerful figure in Tata’s vast business empire, which is valued at around Rs 34 trillion.

Tata Group was founded in 1868 by Jamsetji Tata, the Tata Group is now a global conglomerate operating in over 100 countries, with over 100 companies. Its market capitalization stands at $403 billion (approximately ₹33.7 trillion).

Difference Between Tata Sons, Tata Group, and Tata Trusts

The structure of the Tata empire is very complex to understand, it consists of Tata Sons, Tata Group, and Tata Trusts. To simplify, Tata Sons is the parent company of the Tata Group, which includes more than 100 operating companies. Tata Sons is controlled by Tata Trusts, which holds a 66% stake in the company through an umbrella of 14 trusts.

Tata Sons is essentially a holding company, owning vast assets like land, tea estates, and steel plants. Its revenue is primarily derived from dividends and brand loyalty fees from its subsidiaries.

How Tata Trusts Control Tata Sons?

Tata Trusts, on the other hand, is an umbrella organization focused on philanthropy in areas such as art, culture, education, health, and livelihood generation. It holds a combined 66% majority stake in Tata Sons, making it the most significant shareholder in the company.

Two main trusts, the Sir Ratan Tata Trust and the Sir Dorabji Tata Trust, jointly hold 52% of Tata Sons. The other 12 trusts collectively hold 14%, resulting in Tata Trusts having a total 66% stake in Tata Sons.

As of now, Tata Trusts is governed by 13 trustees. These include trustees from the Sir Ratan Tata Trust and the Sir Dorabji Tata Trust. Five individuals serve as trustees for both trusts: former Defense Secretary Vijay Singh, TVS Group’s Venu Srinivasan, Noel Tata, businessman Mehli Mistry, and lawyer Darius Khambata. Additionally, trustees like former CEO of Citi India Pramit Jhaveri and Ratan Tata’s younger brother, Jimmy Tata, also serve on the board of trustees.

Because of its controlling stake, Tata Trusts essentially holds full power over Tata Sons, the entity that controls the Tata Group. No significant decision can be made by Tata Sons without the approval of Tata Trusts, making it the ultimate governing body of the Tata conglomerate.

Ratan Tata Changed Tata Group’s Rules In 2012

According to the group’s regulations, the two main trusts can nominate one-third of Tata Sons’ directors. They have the final authority to appoint or remove these directors. These extensive controls were granted to the two trusts when Ratan Tata changed the group’s rules after his retirement in 2012.

These changes were made possible after the Indian government amended the Companies Act, allowing Tata Trusts to directly vote on Tata Sons’ board decisions.

As the chairman of Tata Trusts, Noel Tata now holds broad powers over Tata Sons, given that the Trusts have a controlling stake in the company. However, it is essential to note that Noel Tata does not personally own these 66% shares in Tata Sons these are owned by the Trusts. His personal stake in the company is a separate matter.